May 7, 2013 Report of Finance Committee to Town Meeting

To: Westport Town Meeting
From: Finance Committee
Date: May 7, 2013
RE: Challenges of our Financial Situation

Arriving at a balanced budget to recommend to you this year was a particularly difficult and painful process. There were many worthy financial needs in all departments. Fiscal years 2009 to 2012 have been ones of severe budget restrictions. One cause has been drastic decreases in State aid, which, by FY2012, was approximately $700,000 less than what had been provided in FY2009. These cutbacks have essentially netted out to zero any increases in revenue that would otherwise have been gained through the Town’s taxing. Although there may now be signs of slow improvement in the economy, the projections for State aid in the near future show no signs of improving. At the same time, there is no relief from State mandates for Town funding that are not matched with State dollars. As one example, we have an increasing number of veterans in Town due principally to the Iraq and Afghanistan wars. The number of eligible veterans has increased by 21% over the past 2 years and the cost per veteran has increased by 13%. We are required to pay this amount. While we get refunded by the State for 75% of the amount, it takes two years before we are reimbursed. Another example is provided by the hundreds of thousands of dollars in special education costs for needy children incurred by the Town each year that are reimbursed at only about 70% of what the Town pays out for only the most severely disabled students — and this at a time when State and federal grants to the schools have decreased by almost $200,000 in the last four years.

We have numerous budget demands regarding which we have no financial flexibility. These include the Diman Vocational School and the Bristol County Agricultural School. Pension and health costs are also in this category. The transfer of the Beach Committee to an Enterprise Fund has deprived the Town of a contribution to the general fund. Particularly serious in its consequences is the situation created by the discovery of PCBs at the Middle School.  Money borrowed for the clean-up of the Middle School adds principal and interest costs of $221,140 to the operating budget each year because of the unavailability of a debt exclusion. In addition we must appropriate another $50,000 this year to monitor the PCB’s in and around the building.

Excellent financial management by the Town Administrator and the financial offices of Treasurer, Accountant, Tax Collector and Assessors yielded a free cash amount of over $800,000 from FY2012. The schools created additional special education programs that saved them over $500,000 in the last three years, and they have used that funding to reduce requests for additional funding for school needs while sending an average of $100,000 or more per year to the Town to be included as part of available free cash. Without this income we would have suffered even more drastic reduction in Town services. Because of it, we were able this year to move from the “level funding” budgets of the recent past to a “level service” budget for most departments. We were able also to provide funding for the Library over level service to achieve the minimum required to prevent losing its State certification. Free cash was needed to support $160,000 of additional snow and ice costs for the winter of 2012-2013. In some places, the Town’s roads may not have been plowed and salted as promptly as in previous winters. In this budget we are presenting for FY2014 we were able to appropriate in advance only $70,000 for snow and ice removal, and the likelihood is that additional funds will have to be appropriated from free cash or FY2015 revenues.

The capital equipment in Town in all departments suffers from a lack of replacement. Many items have long since exceeded their useful or cost effective life. The information technology of the Town badly needs a major upgrading. The desk computing of all departments operates with software of the 1996 vintage. Communication among departments and from the outside cannot be read from more recent software versions. Productivity is slowed drastically and has created problems that occasionally stop work altogether. The Town’s single server is overloaded. An additional server is needed to handle the workload. This year a request is presented for approval to purchase the needed IT equipment and software from borrowed funds that will have to be supported from future operating revenues because of the realistic unavailability of a debt exclusion.

The Finance Committee believes that the Town is severely underfunded to meet the demands of its residents. The outlook is not promising for any relief. Past requests for approval of overrides or debt exclusions have been defeated at the polls. Without Taxpayer support we see increasing reductions of Town services across the board in Town departments including the schools.

The ultimate authority lies at the polls. Voters determine the kind of Town they want and the level of services they are willing to live with. The Finance Committee can only deal with its best estimate of financial resources and we must be conservative else we will be faced with drastic and immediate changes. Many Town needs go unfilled because of the lack of funds to address them. Department heads work hard to do “more with less”. Ultimately, we, the resident property owners of the Town, decide if we are doing our part to make our Town all it can be.